He was a ruling Count of Schwerin and played an important role in the ending of the Danish supremacy in the southern coast of the Baltic Sea.

After the fall of Henry the Lion, Denmark gained supremacy in Northern Germany and on the southern coast of the Baltic Sea.

As Schwerin was occupied by Danish troops, he hid his prisoners in Lenzen in Brandenburg, and later in the tower of the castle in Dannenberg.

Since Valdemar II refused to give in to Henry's demands, the situation came to a head in the Battle of Mölln in January 1225.

In the treaty, it was agreed that Henry would release Valdemar and his son, and Valdemar would pay 45000 mark of silver, give up his claims on Schwerin and Holstein, renounce feudal overlordship over all German territories, except the Principality of Rügen, grant the German cities complete freedom of trade, renounce his right of revenge, and put three of his sons as hostages.

His widow Audacia (daughter of Bolesław of Kuyavia) and his son Gunzelin III released Otto I, after he had confirmed the agreement he had reached with Henry I.

On 3 December 1228, Pope Gregory IX asked Audacia to release the three sons of Valdemar II she was still holding prisoner.